UK outlines proposed tax break for shale gas

The UK government outlined a proposed tax regime for shale gas, including a new shale gas allowance based on existing field allowances for oil and gas production.

The proposed allowance would reduce the tax on a portion of a company’s production income to 30% from 62%, the UK Treasury said in a statement. No UK shale gas wells are on production yet.

A recent report by the British Geological Survey revealed that there is more than twice as much shale gas in the north of England than there was previously thought in the entire country.

Alongside this, new guidance was published July 10 explaining to industry and local communities how applications for exploratory shale gas developments should proceed through the planning system.

The local planning guidance complements measures to help support the shale gas industry. Decisions will be made by councils in a locally led planning process.

The government said it plans a 3-month consultation on the proposed tax break before putting the proposal before Parliament. Called shale gas “pad” allowance, the proposal could go into the finance bill next year, a treasury official told reporters.

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